If capital controls get put properly in place, it’s the end of this monetary system as we know it – at the very least it’s probably the end of Cyprus’s place within it. A euro within Cyprus will suddenly be worth significantly less than a euro in Germany or, for that matter, Greece. Or to put it in more economic, and slightly more doomsday terms, consider this: there’s a pretty fundamental rule in economic policy that nation states must choose two (but not three) of the following: independent monetary policy (in other words the power to set your own interest rates), a fixed exchange rate and free movement of capital. Economists call this the “impossible trinity” or trilemma, because you can never have all three at any one time. If Cyprus is to abandon the free movement of capital, the next economically-logical step is for it to have its own independent monetary policy, in other words to leave the single currency.

Ultimately, money is no longer fungible between Cyprus and the rest of the Eurozone and, at this point in time, it’s hard to argue that a euro in Cyprus is worth the same as a euro elsewhere. The real problem though may not be imposing the controls but removing them – Iceland still has capital controls in place, five years after it installed them (despite having the advantage of a devalued currency).